Bangladesh Bank Governor Ahsan H Mansur has stated that the government, despite its ongoing efforts, might not be able to save some of the weak banks.
He said this while speaking virtually as the special guest at a session titled "Macroeconomic Policy and Governance in the Banking Sector" of a conference at the BRAC Centre Inn Auditorium in Dhaka on Tuesday.
Ahsan H Mansur said, "We are trying to keep the banks alive through good governance. We may not be able to do it all. Not all banks will survive. The chances of some banks surviving are very slim. Because 87% of the deposits of some banks have been given to a family."
He attributed this dire situation to the influence of a single family, stating, "Out of every Tk100 loaned, Tk87 was given to one family. This is how the banking sector has been looted."
To address these issues, Governor Mansur mentioned that the government is working on the Bank Resolution Act, which aims to resolve problems in both public and private banks.
He acknowledged that significant challenges remain across various institutions, including government-owned banks, which are under close monitoring.
He also emphasised the need to reduce the influence of the Financial Institutions Division (FID) on the banking sector. "Regulations are being formulated to ensure that the FID does not interfere in banking operations. Bangladesh Bank must be able to work independently, with minimal political intervention, to safeguard the sector," the governor said.
Governor Mansur reiterated the importance of curbing external interference in the banking sector, particularly from institutions like the FID, to prevent further governance and operational challenges.
He said the central bank will become full autonomous body soon as part of full-course reforms in the banking sector.
"The government has already taken decision to turn the central bank as a full autonomous body. We are taking preparation. We hope that the proposal to this end will be submitted before the Cabinet within two to four months," he said.
In his speech, Ahsan H Mansur said they want to transform the central bank into a completely autonomous institution that will not be influenced by government machinery.
"We want to reshape focus of the BB. We'll leave the activities that are not core central banking. We'll give utmost priority to issues linked with compliance, regulations and enforcement," he added.
He said a new law titled 'Bank Resolution Act' is being formulated to allow the Bangladesh Bank to legally apply corrective measures like mergers and acquisitions, liquidation, re-capitalisation and consolidation of the crisis-ridden banks.
"Under the act, it will be possible to take policy decisions for merger, acquisition, liquidation or recapitalisation of any bank," he added.
Chairman of the National Bank and former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Abdul Awal Mintoo attended the session as the guest of honour while Director (Research) of the Chief Economist's Unit of Bangladesh Bank Dr Md. Salim Al Mamun, Managing Director and CEO of the Mutual Trust Bank Limited Syed Mahbubur Rahman, Chairman of the Global Islami Bank PLC Mohammed Nurul Amin, Professor and Former Chairman Department of Banking and Insurance University of Dhaka Dr Md Moin Uddin and Director General of the Bangladesh Academy for Securities Markets (BASM) Dr Toufic Ahmad Choudhury were present as distinguished discussants.
Executive Director of the CPD and Member of the Task Force on Re-Strategising the Economy Dr. Fahmida Khatun and Member of the Task Force on Re-Strategising the Economy Dr Monzur Hossain delivered the keynote presentations.
